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Republic of the Philippines tX~· t'l'- JAJ t,y/
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS
OFFICE OF THE SECRETARY
Manila

1 4 JUN 2018

DEPARTMENT ORDER ) SUBJECT: Guidelines in the Preparation of


Approved Budget for the Contract

NO.
99 ~
)
(ABC) for Consulting Services for
Locally-Funded Infrastructure
Series of 201~f)"'I('(f Projects

The following policies, rules, and procedures relative to the preparation of the Approved
Budget for the Contract (ABC) for Consulting Services for locally funded infrastructure projects
are hereby issued for the guidance of all concerned. The outline of the ABC is also prescribed
in Annex A.

The estimated cost of the consulting services shall be computed on the basis of actual cost of
services to be rendered by the consultant plus a reasonable management fee. The amount of
management fee depends on the complexity and magnitude of the project, and other direct
expenses associated with the undertakings.

The estimated cost of consulting services shall consist of the following components, which,
for time-based contracts, shall also be presented in the agreement in like manner:

A. Remuneration Costs

Remuneration costs are the salaries to be paid to the consultant's staff/personnel who are
directly engaged in the consulting services as per agreed manning schedule. They cover the
basic salary rates of the staff under item A.l below multiplied by a billing factor of the
consulting firm under item A.2 below.

A.l Basic Salary Rates -These represent the salaries to be received by the professional
staff proposed for the positions. In determining the basic rates, the following may
be considered as bases:

A.1.1 Salary history of comparable staff

A.l.2 Industry rates for similar positions

A.2 Billing Factor or Multiplier - The billing factor or multiplier, as discussed further in
Section E, shall be derived from the following items in Sections B to D. It shall be

/ supported by the latest audited


auditing/accounting entity and
financial statements prepared by an independent
certified by the consulting firm with a sworn
statement.
D.O. No.9!!L Ser1esof 2018
Guidelines in the Preparation of Approved Budget for the Contract (ABC) for Consulting Services for Locally-
Funded Infrastructure Projects
Page 2 of 5

B. Overhead Costs

These are incidental and general administrative and management expenses of the consulting
firm other than those directly related to the project, and are expressed in percent of the total
of the basic salaries of all the personnel of the firm.
For consulting services with the DPWH, the overhead costs shall not exceed one hundred
twenty percent (120%) of the basic salary of the personnel. These costs may include a
combination of the following:

B.l Executive, administrative, accounting, and legal salaries, other than identifiable
salaries included in the basic man-month salaries.

B.2 Legal and corporate expenses, including licenses and professional membership fees.

B.3 Business costs, including representation allowances, advertisements, and


promotions.

B.4 Research and development activities, including personnel development programs.

B.S Provision for office, electricity, water, and similar items for working space.

B.6 Depreciation and amortization.

B.7 Financial and banking costs, including interest expenses and handling charges.

B.8 Building and equipment insurance.

B.9 Provision for loss of productive time of technical employees between assignments.

B.l0 Taxes.

C. Social Charges

These are cost items for the welfare and benefit of the consultant's staff in accordance with
the policies of the consultant and the government. They are expressed as a percentage of the
basic rates of the consultant's personnel.

For consulting services with the DPWH, the social charges shall not exceed twenty percent
(20%) of the basic salary of the personnel. Social charges may include any or a combination
of the following, based on audited and sworn statements:

C.l Bonuses.

C.2 Vacation/sick leave and paid public holidays.

C.3 Medical care.

C.4 Pension plan covering retirement and/or terminal pay.

C.S Company insurance.


D.O. No• ...fiseries of 2018
Guidelines in the Preparation of Approved Budget for the Contract (ABC) for Consulting Services for Locally-
Funded Infrastructure Projects
Page 3 of 5

C.6 Other benefits as required by law.

D. Management Fee

This is the reasonable profit or remuneration of the consultant as a whole for providing the
professional know-how and expertise of the consultant. The management fee shall be fixed
as a percentage of the sum of the basic salary, overhead costs and social charges. For
consulting services with the DPWH, the management fee shall not exceed fifteen percent
(15%) of the sum of the basic salaries, overhead costs and social charges.

E. Multiplier

The billing factor or multiplier is the sum of:

100% +%overhead +%socia/ charges + %management fee

where:

%overhead shall not be more than 120%,


%social charges shall not be more than 20%, and
%management fee shall not be more than 15%.

The multiplier shall not exceed 2.0 to 2.5 for the technical personnel, and shall not exceed
1.8 for the administrative personnel directly hired for the project.

F. Reimbursable Costs

These include all other expenses associated with the execution of the consulting services.
These costs may be classified into:

a. Based on Agreed Fixed Rates

These are cost items which are payable at agreed unit rates to the consultant and
include the following, among others:

F.1 Housing Allowance - This shall cover housing costs, including those for
electricity and water, for consultant's staff. It should not include food and
laundry since these are basic necessities that the consultant has to spend for
even without the project. In considering the housing allowance, the base of
operation and the designated official station of duty of the consultant must be
defined.

The base of operation is the location of the home office of the consultant, while
the designated official station of duty is the location outside of the base of
operation where most of the consultant's staff will be working more often
continuously during the duration of the services.

For local consultants, the base of operation is usually in Metro Manila, and the
designated official station of duty is the project site outside Metro Manila.
Sometimes, in undertaking the services, the consultant's personnel are
D.O. No. tjq, ~ries of 2018
Guidelines in the Preparation of Approved Budget for the Contract (ABC) for Consulting Services for Locally-
Funded Infrastructure Projects
Page 4 of 5

grouped into two (2), i,e" those stationed at the base of operation and those
stationed at the project site, depending on where they will be staying longer
continuously during the duration of the services,

Housing allowance shall be given only for long-term consultant's staff, i.e.,
those who will be staying at the designated official station of duty continuously
for more than one (1) month, However, in the case of construction supervision,
such allowance shall not be given for the consultant if the contractor has
already included facilities for the engineers in its Bill of Quantities (BOQ).
Likewise, the DPWH may also provide housing facilities at the designated
official station of duty instead of giving housing allowance. The work and
manning schedules, together with the designated base of operation and the
official station of duty, shall be the basis for determining the rates of housing
allowance and per diem.

F.2 Per Diems - These are daily allowances given to the consultant's personnel
while on official trips authorized by the DPWH and/or explicitly required in the
contract as follows:

F.2.1 Outside of the base of operation for consultant's staff stationed there.

F.2,2 Outside of the designated official station of duty for consultant's staff
stationed there, except when staying at the base of operation, Per
diems shall be applicable to a 24-hour day trip of at least 50 kilometers
(km) away from the station, and, in the case of Metro Manila, at least
50 km from the last city in that region.

b. Based on Actual Costs

These are cost items which are payable based on actual invoices, receipts and/or
other supporting papers, and include the following:

F,3 Domestic Travel - This covers the cost of economy class air transportation
and/or land transportation by the most direct and expeditious routes of the
consultant's staff for official trips authorized by the DPWH and/or explicitly
required in the contract.

FA Domestic TransDortation - This covers the provision of vehicles either through


purchase or rental.

F.5 Communication - This includes telephone, mobile, two-way radio, internet,


parcel, freight, courier, fax, and other means.

F.G Office/engineering supplies and preparation/reproduction of drawings and


other documents to be submitted.

F.7 Equipment rental and purchases whenever justifiable - These include purchase
of desktop computers (for admin staff only), rental/purchases of equipment
used for surveying and other engineering activities that shall be turned over to
the DPWH upon completion of the contract. However, laptops (for key
personnel or other technical staff), and basic software applications (Microsoft
D.O. No. ~ Seriesof 2018
Guidelines in the Preparation of Approved Budget for the Contract (ABC) for COnsulting Services for Locally-
Funded Infrastructure Projects
Page 5 of 5

Office, AutoCAD, Google Sketchup, STAAD Pro, EfABS, Primavera, etc.) shall
not be included in the ABC as these are the basic necessities of consultants in
their daily operations even without the project.

F.B Other items deemed necessary for the project as certified by the DPWH.

G. Contingency

Payments with respect to items of additional work within the general scope of services that
may turn out to be necessary as the study progresses or costs that would exceed the
estimates set forth may be chargeable to the contingency amounts in the respective
estimates. However, these payments can be done only if such costs are approved by the
DPWH prior to their being incurred and provided that they shall be used only in line with the
unit rates and costs specified in the contract and in strict compliance with the project needs.

The contingency amount must not exceed five percent (5%) of the amount of the contract
excluding value added taxes.

H. Value Added Taxes (VAT)

VAT is set at twelve percent (12%) of the remuneration.

I. Proposed Total ABC

The sum of the Remuneration Costs (sum of the Basic Salary, Overhead, Social Charges, and
Management Fee), Reimbursable Costs, Contingency, and VAT, in accordance with the above
guidelines, comprises the base cost of the consulting services, as of the date when the
estimate is done.

Since the contract cost is usually a fixed price, adequate provision must be made for the
increase in cost due to inflation, projected from the date of the base cost estimate up to the
estimated date of completion of the services, based on official price indices of the Philippine
Statistics Authority (PSA).

The proposed total ABC is then the sum of (i) the base cost and (ii) the increase in cost due
to inflation. This is subject to the approval of the HoPE.

The Procurement Service - Consulting Services Division (PrS-CSD) shall maintain a record of
billing rates (remuneration and reimbursable costs) and continuously update them based on
approved contracts nationwide.

This Order shall take effect immediately.

~ MARK A. VILlAR
J?---
Secretary

12.1.2 FJZD/JABSI.MGNO/MVSG

Department of Public Works and Highways


Office of the Secretary

"111111111111111111111111111111111 111I1
WIN8XS00338
ANNEX A

APPROVED BUDGET FOR THE CONTRACT (ABC) OUnlNE

Summary of Cost

No. Item Cost


I Remuneration Costs
II Reimbursable Costs
III Miscellaneous Expenses
IV Sub-total (1+ II + III)
V VAT (12% of Remuneration)
VI Contingency (5% of IV)
VII Grand Total (IV + V + VI)

If procured bv the Central Office:

Prepared by: Reviewed by:

[Name of the Head of the Implementing [Name}


Unit (IU)} Director, Bureau of Design
[Designation}

Recommending Approval: Approved by:

[Name} [Name}
Assistant Secretary for Technical Services Undersecretary for Technical Services

If orocured bv the ReoionalOffice:

Prepared by: Recommending Approval:

[Name of the Head of the IU} [Name}


[Designation} Assistant Regional Director

Approved by:

[Name}
Regional Director
Approved Budget for the Contract (ABC) Outline
Page 2 of 3

If procured bv the District Engineerino Office:

Prepared by: Recommending Approval:

[Name of the Head of the IU] [Name]


[Designation] Assistant District Engineer

Approved by:

[Name]
District Engineer
Approved Budget for the Contract (ABC) Outline
Page 3 of 3

Breakdown of Cost Estimates

I. Breakdown of Remuneration Costs

Positions No. of Man-Months Billing Rate Amount


Personnel
Key Staff
1.
2.
3.
4.
5.
Sub-total
Administrative and Support Staff
1.
2.
3.
4.
5.
Sub-total

Total I

II. Breakdown of Reimbursable Costs

A
No. Unit Unit Price Amount
1.
2.

B Based on Actual Cost


No. Description Unit Quantity Unit Price Amount
1. Domestic Travel
2. Domestic Transportation
3. Communication
4. Office Supplies
5. Office Rental
6. Eauipment Rental/Purchase
7. Other items deemed
necessary for the project
Total II.B

III. Miscellaneous Expenses

No. Descri tion Unit Unit Price Amount


1. Activity Surveys /
Investi ations Etc.
2. Meetin s
Total III

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